One of the most popular questions today, whether it be on the news, TV, radio, magazines or the Internet is "what is a good credit score"? Many people wonder, but don't know, what number actually constitutes a good credit score? The short answer - a score above 700 is considered not just a good but an excellent credit score. A good credit score may not be the same as winning the lottery, but it plays a very important part to your financial future.
What is the system that calculates whether you have a good or great credit score? Fair Isaac Corporation or FICO® is a company who devised the credit scoring chart or system used by the three credit rating bureaus or agencies:
Unfortunately, the way each credit reporting agency determines what your score is varies because for example, your credit history from Experian may be more or less extensive or up-to-date than say Trans Union or Equifax.
Many of the most important pursuits in life can be affected by a good versus an average or poor credit score. If you're interested in applying for a new credit card, buying a house, or even getting a job, your credit score can sway the balance. It can affect how much interest you'll pay or even whether you get that credit card, own your dream home or get employment! Why?
Lenders, employers, even insurance companies buy your credit score from one or all of the three credit scoring bureaus and rely heavily on your three digit score to decide whether you are a good credit lending risk or future employee.
Not to worry. Even though the higher your credit score number, the greater financial freedom you'll receive, most people don't have the coveted 700 plus excellent or "good credit score." In fact, credit scores range from the 300s at the low end and peak at 850. The typical credit score for many is in the 600s and 700s.
In addition to credit scores calculated by Experian, Trans Union and Equifax, there are a number of independent companies, credit reporting agencies, and even certain lenders who have their own rating systems for formulating what a good credit score is.
Suppose you have a poor credit score (below 600) and want a good or even excellent credit score. The good news is that your credit score is changeable and can go up with healthy credit habits like:
Also, a good credit score is maintained or achieved by having a variety of credit accounts such as:
Regularly checking your credit scores and reports from the three main bureaus can help you maintain your good credit scores or improve your poor or average scores toward a more secure financial future.
